Goldman Sachs drops consumer loans as losses mount

How much will it cost for Goldman Sachs get out of it ?

The Wall Street bank, long known for serving big business and wealthy clients, revealed the latest fallout from his half-decade effort expand into loans and savings products for the less fortunate. Goldman said it sold some of those low-end loans and admitted defeat on others to the tune of nearly $500 million in losses.

Even for a lender as big as Goldman, that’s no mean feat. The bank made $3.2 billion in the first quarter — beating investor expectations and mostly avoiding recent rounds of filings that rocked its smaller counterparts — but it would have been much more without those losses. Shares of the company fell 3% in premarket trading after the earnings release.

The consumer banking branch, named Mark after the bank’s founder, was launched under former Goldman chief executive Lloyd C. Blankfein and has grown under its current leader, David M. Solomon. Mr. Solomon made little concealment of his desire to go out of business, and indicated earlier this year that the bank was looking to sell the unit, among other options. The fact that Goldman still retains part of the portfolio, however, indicates that a full exit did not come quickly.

Banks that provide consumer loans, especially small lenders and regional lenders, have been under pressure since the collapse last month of Silicon Valley Bank and Signature Bank. As an investment bank and corporate adviser, Goldman is mostly immune to these pressures.

“Events in the first quarter acted as another real stress test, demonstrating the resilience of Goldman Sachs and the nation’s largest financial institutions,” Solomon said in a statement.

Leave a Comment